Michael Saylor said he is not worried about Strategy’s credit risk despite Bitcoin’s continued decline. He said the company is already planning to respond to an ugly market. Prices could fall significantly or stay low, and the company would still exist. The plan is simple:- If Bitcoin collapses for years, the debt will be refinanced and promoted.
Saylor spoke as Bitcoin fell 9% in five days to trade around $68,970. The token fell to $60,062, its lowest level in nearly 16 months. At that time, it was down more than 50% from its all-time high. Despite this, Saylor said the company will continue to buy Bitcoin on a quarterly basis and will not sell anything it already owns.
Saylor develops refinancing plan as debt remains high
Co-founder and executive chairman Michael Saylor told CNBC that plans remain the same, even in the face of a brutal collapse. “If Bitcoin drops 90% over the next four years, we’ll refinance the debt. We’ll just bring it forward,” Saylor said.
Asked if banks would lend in that scenario, he said “yes,” citing Bitcoin’s volatility as a reason lenders would remain interested. He said volatility doesn’t destroy value.
Strategy has total debt of more than $8 billion. Most of that came from convertible banknotes used to buy Bitcoin. The company currently holds 714,644 Bitcoins worth approximately $49 billion, making it the largest corporate holder of this asset. Saylor said the company plans to continue buying Bitcoin on a quarterly basis forever and has no intention of selling its holdings.
He also said the company has about two and a half years’ worth of cash on its balance sheet to cover the dividend. He then said Strategy would not face margin calls and had enough cash at $2.25 billion to pay interest and distributions over two years. Still, pressure is mounting as Bitcoin trades below the company’s average cost of $76,052.
Losses deepen as volatility falls and investors become defensive.
The numbers on paper are getting worse. In its latest earnings release, Strategy reported a fourth-quarter net loss of $12.4 billion. As reported by Cryptopolitan, this loss was due to a decline in the market value of Bitcoin holdings.
This week, further market stress caused the value of Strategy’s holdings to fall below its total purchase cost for the first time since 2023, wiping out post-election gains.
The company also said it does not expect to generate revenue or profits this year or in the near future. Based on this outlook, Strategy said it expects distributions to holders of perpetual preferred stock to be tax-free for the time being. On Tuesday, Bitcoin fell back below $70,000, and the stock fell about 2%. The stock price has fallen more than 40% in the past three months.
Market signals are warning. Bitcoin’s implied volatility has fallen from about 83% to nearly 60%, indicating a decline in expectations for sharp fluctuations. At the same time, options traders remain defensive. The put skew on the 25 delta call remains tilted towards puts, indicating demand for downside protection.
Chief Executive Officer Von Leh told recent buyers to be patient during an earnings call. “Some people bought Bitcoin or MSTR last year, but this is the first decline. My advice is to hold on,” Fung said. His comments sparked angry reactions in the livestream chat.
For the past four years, Strategy has served as a high-beta agency for Bitcoin. The stock price rose more than 3,500% between 2020 and 2024.
The rally was driven by stock sales and debt, but the company also became a target for critics of its leveraged crypto exposure. Saylor made it clear that the criticism will not change his plans.
